Sign up for our free daily newsletter
Get the latest news and some fun stuff
in your inbox every day
On Thursday last week Lululemon reported second quarter earnings which were well received. The stock closed up 7.8% and is now up 40% so far this year. Why was the share price up so much? It seems to be because full-year expectations were hiked.
Revenues for the quarter came in at $883m versus expectations of $846m on the back of a 15% increase in same store sales. What was predominantly a female brand has taken a big shift. Mens wear grew 35% for the group, while overall sales increased by 22%. There was a 31% increase in online sales.
These numbers all look great, but you have to pay for it. Earnings expectations are for $4.70 for the year. At $203 you are paying 43 times earnings.
As you know we like the sector; personally, I love the Lululemon brand. It still has a lot of potential because 90% of its sales come from North America. Global expansion is on the horizon for sure. But this won't be a relaxing yoga session investment. It will be wild and volatile. We have good exposure to athleisure through Nike but if you want some extra stretch, buy some Lululemon shares too.
